FinBytes by Finwisor - New Personal Income Tax Slabs FY21
Dear Finwisor Family,
Budget 2020 announced new personal income tax slabs with the caveat that 70 exemptions & deductions won’t be allowed. These new slabs are applicable from the Financial year 2020-21.
What are the slabs?
Let's look at a comparison of the old and new income tax slabs:
Optional
The new income tax slabs are optional in nature. While salaried people may exercise this option every year, for those having any business income- option once exercised will apply forever#.
#The option may be withdrawn ONCE, however, once withdrawn he can never opt for it again.
Major disallowed Exemptions & Deductions
Salary Exemptions – Standard deduction of ?50K, House Rent Allowance, Leave Travel Allowance
House Property exemptions – Interest on loan in case of Self-occupied property
Income from other sources exemption – Savings Bank Interest (up to ?10K)
Deductions – 80C (Life Insurance, PPF, ELSS)- up to ?1.5L, 80D (Health Insurance), 80G (Charity), 80E (Interest on Education Loan)
What should you choose?
If you have any business income, it's definitely not a good idea to lock yourself into the new regime.
For others, if your total disallowed deductions cross ?2.5L, stay with the old regime. Others may have to calculate.
They can do it through this link: https://www.incometaxindiaefiling.gov.in/Tax_Calculator/index.html
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Great initiative! Although, I think that to better substantiate your argument in the piece, hypothetical incomes could have been used to show the effect of choosing one tax option over the other. It would give a lot of clarity to people reading this & add weight to your argument. Just a suggestion. :)